Dear Momentum Options Subscriber,
The bulls finally had a strong Monday showing, as the blue-chips ended a four-week Monday losing streak with yesterday’s win. The other indices also performed well, and record highs and a major move above resistance were achieved. The VIX spiked a little on the open, but it was nothing serious, as the momentum continues to push the market higher.
The Dow gained 59 points, or 0.3%, to close at 18,636. The blue-chips opened at 18,588 and reached a fresh all-time peak of 18,668. The push past upper resistance at 18,500-18,600 was bold and gets the upper fluff targets of 18,800-19,000 into the mix. Support at 18,400-18,350 has held for six of the past seven sessions.
The S&P 500 added 6 points, or 0.3%, to end at 2,190. The index made a steady run towards resistance at 2,190-2,200 while holding lower levels of support. A move above the latter opens up blue-sky territory to 2,220-2,235. Fresh support is at 2,180-2,175.
The Nasdaq jumped 29 points, or 0.6%, to settle at 5,262. Tech traded to a record high of 5,271 mid-day and cleared resistance at 5,225-5,250. These levels are now near-term support. The surge opens the door for additional fluff to 5,275-5,300. I mentioned yesterday morning that I wanted to see the recent all-time high of 5,238 cleared. Mission accomplished.
The Russell 2000 rocketed higher by a 12-pack, or 1%, to finish at 1,241. The small-caps opened at 1,230 and cleared the 1,240 level (both are now support) before tapping 1,243. This paves the way for a possible push to 1,250-1,260.
The S&P 500 Volatility Index ($VIX, 11.81, up $0.26) opened at 11.81 and kissed a high of 12.17. Believe it or not, resistance at 12.50-13.50 has held since mid-July, which is a powerful stat the slick-talking pros continue to ignore. A close above the latter would be the first warning signal that a market top is in. Continued closes below support at 11.50 would get my low target of 10 and single-digits in play.
I have updated the parameters for our trade in Viavi Solutions (VIAV) this morning, so let’s check it out.
From desk to press, futures look like this: Dow (-28); S&P 500 (-3); Nasdaq 100 (-6); Russell (-2).
Momentum Options Play List
Closed Momentum Options Trades for 2016: 61-22 (74%). All trades are dated and time stamped so new subscribers can look at the past history to see how the trades have played out.
Do not risk more than 5% of your trading account on any one trade but do try to take all of the trades. Please remember, all “Exit Targets” and “Stop Targets” are targets. You should not have any “Hard Stops” entered to close any trades or “Exit Orders” in your brokerage account unless I list one. I will send out a “Profit Alert” or “New Trade” if I want you to close a position or if a new trade comes out. Otherwise, follow instructions at all times in the 9 a.m. and 12 p.m. – 1 p.m. updates. Also, I will usually give you a heads-up if I think I’m going to send an email outside of these time frames.
All prices given in this update are current as of 8:00 a.m. EST.
I hereby disclose that I will be participating in the following trade(s).
Viavi Solutions (VIAV, $7.54, up $0.24)
VIAV September 7 calls (VIAV160916C00007000, $0.64, up $0.21)
Entry Price: $0.55 (6/23/2016)
Exit Target: $1.10
Stop Target: $0.57 (Stop Limit)
Action: Set a Stop Limit at $0.57 to protect profits. This is one of our longer-running trades, so I want to start protecting profits and move on to faster-moving positions.
Shares traded to a fresh 52-week high of $7.65 yesterday. New resistance is at $7.75-$8. Support is at $7.25.
MGM Resorts International (MGM, $24.84, up $0.34)
MGM September 25 calls (MGM160916C00025000, $0.65, up $0.12)
Entry Price: $0.70 (8/8/2016)
Exit Target: $1.40
Stop Target: None
Action: Shares tested upper resistance at $24.75-$25 following Monday’s pop to $24.96. Rising support is at $24.50-$24.25.
Bank of America (BAC, $15.02, up $0.11)
BAC September 15 calls (BAC160916C00015000, $0.36, up $0.04)
Entry Price: $0.50 (8/8/2016)
Exit Target: $1.00
Stop Target: None
Action: Short-term resistance is at $15-$15.25. Support is at $14.75-$14.50.
Rambus (RMBS, $13.72, up $0.12)
RMBS September 14 calls (RMBS160916C00014000, $0.35, up $0.08)
Entry Price: $0.40 (8/1/2016)
Exit Target: $0.80
Stop Target: None
Action: Yesterday’s peak reached $13.85. Resistance is at $13.75-$14. Support is at $13.50-$13.25.
Editor and Chief Options Strategist